INVESTMENT PLANNING IV: INVESTMENT POLICY AND PORTFOLIO MANAGEMENT

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INVESTMENT PLANNING IVINVESTMENT POLICYAND
PORTFOLIO MANAGEMENT
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THE INVESTMENT PLANNING PROCESS

• 1. Help client set realistic investment goals.
• 2. Determine funding requirements and sources.
• 3. Develop appropriate investment plans and
  strategies, given funding requirements, risk
  tolerance, and expected returns.
• 4. Implement strategy-construct portfolio(s) with
  appropriate risk/return attributes.
• 5. Monitor portfolio.

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THE INVESTMENT PLANNING PROCESS

• 1. Help client set realistic investment goals.

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THE INVESTMENT PLANNING PROCESS

• 2. Determine funding requirements and sources.

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THE INVESTMENT PLANNING PROCESS

• 3. Develop appropriate investment plans and
  strategies, given funding requirements, risk
  tolerance, and expected returns.

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THE INVESTMENT PLANNING PROCESS

• 4. Implement strategy/construct portfolio with
  appropriate risk/return attributes.

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PORTFOLIO MANAGEMENT DEFINITIONS

• Asset allocation
• Security selection
• Market timing
• Active/passive management
• Shortfall risk
• Fundamental analysis

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Your Objective Type of Fund
Types of Holding Growth
Potential Income Potential Risk
Money Market Tax-exempt money market Taxable
bond Tax-exempt bond Balanced Equity income
stock Growth income stock Domestic growth
stock International growth stockAggressive
growth stock Small-capitalization
stock Specialized stock
Income, stability of principal Tax-free
income, stability Income Tax-free
income Income, growth Growth
Aggressive growth
Money market instruments Municipal money market
instruments Government and/or corporate
bonds Municipal bonds Stocks and
bonds High-yielding stocks, convertible
securities Dividend-paying stocks U.S. stocks
with high potential for growth Stocks of
companies outside United StatesStocks with very
high potential for growth Small company
stocks Stocks of industry sectors
None None None None Moderate Moderate to
High Moderate to High High HighVery
High Very High High to Very High
Moderate Moderate Moderate to
High Moderate to High Moderate to
High Moderate Low to Moderate Very Low Very
Low to LowVery Low Very Low Very Low to
Moderate
Very High Very HighLow to Moderate Low
to Moderate Low to Moderate Low to
Moderate Low to Moderate Low Very LowVery
Low Very Low Very Low
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THE INVESTMENT PLANNING PROCESS

• 5. Monitor portfolio.